Federal Housing Rescue Program Already In Effect

October 7th, 2008 by

admin

The last couple of years have indeed been tough for the housing industry. With the national foreclosure rate reaching record high levels and home prices plummeting, it is not surprising for the entire nation to expect the government to step in and address these problems. After much delay, the government finally approved a $300B housing rescue program, which took effect last October 1.

For millions of distressed homeowners, the long wait is finally over. They could now avoid losing their homes to foreclosure. All they have to do is to go to their lender, submit the requirements and sign up.

Of course, you must remember that the success of the said multi-billion housing rescue program depends on two things: the lenders approval and whether you are qualified.

A couple of days after the implementation of the said mortgage relief program, there were still no lenders signing up. Since participation is voluntary, many critics are saying that it should have been mandatory. Many lenders are actually wary about the possible loss they will incur once the existing mortgage is transferred. In addition, they will also have to pay an upfront fee, amounting to about 3% of the loan principal.

As for the borrowers, they should be presently living in the distressed property and must be able to provide proof that they could no longer afford their mortgage payments. If approved, their existing mortgage will be replaced with a 30-year fixed rate mortgage. On the off chance that the property will be sold, a percentage of the profit will go to the FHA.

In some states, lenders are showing their willingness to participate as long as the terms the refinancing agreement meet their underwriting standards. Some lenders have even begun contacting qualified homeowners to interest them to participate in the said program.

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